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NAFTA Nay Sayers Need a Timeout | |
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THE CONSERVATIVE REVIEW
March 18, 2008
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NAFTA Nay-Sayers Need a Timeout
By Donald Lambro
WASHINGTON -- The economy's emergence as the main issue
in this year's presidential election means that the
voters will be pounded by a lot of persistent myths about
trade and jobs.
The worst myth asserts that trade agreements, particularly
the North American Free Trade Agreement (signed, sealed
and delivered by Bill Clinton), are to blame for the de-
cline in manufacturing jobs in America. I wrote about this
recently, but the issue is worth revisiting because it is
growing in political intensity and will be one of the key
ideological battlegrounds in the Pennsylvania Democratic
primary next month. Barack Obama and Hillary Clinton have
said they want a "timeout" on trade and that they both
plan to revisit NAFTA in an attempt to change or in some
way undo the agreement with Canada and Mexico.
President Bush addressed their threats to renegotiate
NAFTA last week in an address before the U.S. Hispanic
Chamber of Commerce, saying if such a rejiggering
happened, it would result in "a timeout from growth, a
timeout from jobs and a timeout from good results."
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I wish I could say the national news media is quick to
correct mistruths, untruths and half-truths being spread
about trade. But campaign reporters remain woefully
uninformed about economic issues and show little interest
in examining whether the Democratic candidates' negative
statements regarding free trade hold up to serious scrutiny.
This was notably true during the Ohio primary when Hillary
and Obama waged slash-and-burn campaign attacks on NAFTA
and trade.
What's difficult in debating this issue is that sometimes
two seemingly contradictory results can, to one degree
or another, be true at the same time. Ohio lost about
200,000 manufacturing jobs between 2000 and 2003, and some
of its companies have moved facilities elsewhere in the
country or abroad. And we have had to compete with major
foreign exporters such as China and the economic pressures
that can result from such new players in the global arena.
But at the same time Ohio has also benefited from NAFTA,
and trade in general.
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"A critical fact overlooked by politicians who blame lost
jobs on NAFTA is that during those three years Ohio man-
ufacturers actually sold more goods to Canada and Mexico
... than it took in," John Engler, president of the
National Association of Manufacturers, wrote in a recent
op-ed article. "If Ohio exported more to these countries
than it imported ... how can these politicians argue this
agreement cost us jobs," Engler argued. One out of every
five manufacturing jobs in Ohio "depends on making pro-
ducts that are sold overseas," and its "exports to NAFTA
countries increased more than 31 percent in the past
five years."
The reasons Ohio has lost manufacturing jobs are more
complicated than the simply blaming NAFTA. The state was
hit hard early this decade when the economy was slowing
down, state taxes were raised -- making Ohio less
competitive -- and technology made manufacturing more
productive, requiring fewer workers.
Politicians, being what they are, never talk about the
natural churning of the U.S. workforce. In the last few
years, almost a million Americans left or lost their
jobs each week. However, a little more than that were
hired each week, too. Employment has declined in the
last two months as a result of the slowdown, but before
that we had nearly five years of net job growth.
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The fact is that, even during our current economic rough
patch, trade remains one of the bright spots in a $14-
trillion-a-year economy. A typical example: Last week,
Caterpillar boosted its sales forecast by 20 percent,
largely because of growing foreign demand for its con-
struction and farm machinery.
Another example: Whirlpool, whose 9,000 workers manufacture
top-of-the-line, energy-efficient appliances at four plants
in Ohio. Over 20 percent of the Clyde factory's sales come
from overseas -- business that will grow as we negotiate
and sign trade agreements with other countries to drop
their tariffs on American-made products.
Hillary and Obama are fond of roundly condemning job
outsourcing, but they never mention the rise of
"insourcing" from foreign companies that find it pays
to build their manufacturing plants here. BMW, the
German automotive giant, has announced that it will ex-
pand production at its South Carolina plant by more than
50 percent, while it cuts jobs in Germany. Also taking
advantage of the lower dollar, Toyota will be buying more
of their parts locally and that, too, will help boost
employment. Meanwhile, the United States remains the larg-
est exporter in the world, selling $1.6 trillion in goods
and services abroad last year -- the fourth straight year
of double-digit export growth, says Commerce Secretary
Carlos Gutierrez.
NAFTA has been a driving force in that export growth.
Closing the United States off from the global marketplace,
or calling for a "timeout," is a job-killer. The jobs of
the future are going to come more and more from selling
our stuff to a growing world economy.
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